98 Phil 711 Business Organization Corporation Law Sociedad Anonima Corporate

Existence
Benguet Consolidated Mining Company was organized in 1903 under the Spanish Code of
Commerce of 1886 as a sociedad anonima. It was agreed by the incorporators that Benguet
Mining was to exist for 50 years.
In 1906, Act 1459 (Corporation Law) was enacted which superseded the Code of Commerce of
1886. Act 1459 essentially introduced the American concept of a corporation. The purpose of the
law, among others, is to eradicate the Spanish Code and make sociedades anonimas obsolete.
In 1953, the board of directors of Benguet Mining submitted to the Securities and Exchange
Commission an application for them to be allowed to extend the life span of Benguet Mining.
Then Commissioner Mariano Pineda denied the application as it ruled that the extension
requested is contrary to Section 18 of the Corporation Law of 1906 which provides that the life
of a corporation shall not be extended by amendment beyond the time fixed in their original
articles.
Benguet Mining contends that they have a vested right under the Code of Commerce of 1886
because they were organized under said law; that under said law, Benguet Mining is allowed to
extend its life by simply amending its articles of incorporation; that the prohibition in Section 18
of the Corporation Code of 1906 does not apply to sociedades anonimas already existing prior to
the Laws enactment; that even assuming that the prohibition applies to Benguet Mining, it
should be allowed to be reorganized as a corporation under the said Corporation Law.
ISSUE: Whether or not Benguet Mining is correct.
HELD: No. Benguet Mining has no vested right to extend its life. It is a well settled rule that no
person has a vested interest in any rule of law entitling him to insist that it shall remain
unchanged for his benefit. Had Benguet Mining agreed to extend its life prior to the passage of
the Corporation Code of 1906 such right would have vested. But when the law was passed in
1906, Benguet Mining was already deprived of such right.
To allow Benguet Mining to extend its life will be inimical to the purpose of the law which
sought to render obsolete sociedades anonimas. If this is allowed, Benguet Mining will unfairly
do something which new corporations organized under the new Corporation Law cant do that
is, exist beyond 50 years. Plus, it would have reaped the benefits of being a sociedad anonima
and later on of being a corporation. Further, under the Corporation Code of 1906, existing
sociedades anonimas during the enactment of the law must choose whether to continue as such
or be organized as a corporation under the new law. Once a sociedad anonima chooses one of
these, it is already proscribed from choosing the other. Evidently, Benguet Mining chose to exist

as a sociedad anonima hence it can no longer elect to become a corporation when its life is near
its end.
26 SCRA 242 Business Organization Corporation Law Domicile of a Corporation By
Laws Must Yield To a Court Order Corporation is an Artificial Being
In March 1960, Idonah Perkins died in New York. She left behind properties here and abroad.
One property she left behind were two stock certificates covering 33,002 shares of stocks of the
Benguet Consolidated, Inc (BCI). Said stock certificates were in the possession of the Country
Trust Company of New York (CTC-NY). CTC-NY was the domiciliary administrator of the
estate of Perkins (obviously in the USA). Meanwhile, in 1963, Renato Tayag was appointed as
the ancillary administrator (of the properties of Perkins she left behind in the Philippines).
A dispute arose between CTC-NY and Tayag as to who between them is entitled to possess the
stock certificates. A case ensued and eventually, the trial court ordered CTC-NY to turn over the
stock certificates to Tayag. CTC-NY refused. Tayag then filed with the court a petition to have
said stock certificates be declared lost and to compel BCI to issue new stock certificates in
replacement thereof. The trial court granted Tayags petition.
BCI assailed said order as it averred that it cannot possibly issue new stock certificates because
the two stock certificates declared lost are not actually lost; that the trial court as well Tayag
acknowledged that the stock certificates exists and that they are with CTC-NY; that according to
BCIs by laws, it can only issue new stock certificates, in lieu of lost, stolen, or destroyed
certificates of stocks, only after court of law has issued a final and executory order as to who
really owns a certificate of stock.
ISSUE: Whether or not the arguments of Benguet Consolidated, Inc. are correct.
HELD: No. Benguet Consolidated is a corporation who owes its existence to Philippine laws. It
has been given rights and privileges under the law. Corollary, it also has obligations under the
law and one of those is to follow valid legal court orders. It is not immune from judicial control
because it is domiciled here in the Philippines. BCI is a Philippine corporation owing full
allegiance and subject to the unrestricted jurisdiction of local courts. Its shares of stock cannot
therefore be considered in any wise as immune from lawful court orders. Further, to allow BCIs
opposition is to render the court order against CTC-NY a mere scrap of paper. It will leave Tayag
without any remedy simply because CTC-NY, a foreign entity refuses to comply with a valid
court order. The final recourse then is for our local courts to create a legal fiction such that the
stock certificates in issue be declared lost even though in reality they exist in the hands of CTCNY. This is valid. As held time and again, fictions which the law may rely upon in the pursuit of
legitimate ends have played an important part in its development.

Further still, the argument invoked by BCI that it can only issue new stock certificates in
accordance with its bylaws is misplaced. It is worth noting that CTC-NY did not appeal the order
of the court it simply refused to turn over the stock certificates hence ownership can be said to
have been settled in favor of estate of Perkins here. Also, assuming that there really is a conflict
between BCIs bylaws and the court order, what should prevail is the lawful court order. It would
be highly irregular if court orders would yield to the bylaws of a corporation. Again, a
corporation is not immune from judicial orders.

287 SCRA 232 Business Organization Corporation Law Extent of Power of the Securities
and Exchange Commission
Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real estate business. PALI was
granted permission by the Securities and Exchange Commission (SEC) to sell its shares to the
public in order for PALI to develop its properties.
PALI then asked the Philippine Stock Exchange (PSE) to list PALIs stocks/shares to facilitate
exchange. The PSE Board of Governors denied PALIs application on the ground that there were
multiple claims on the assets of PALI. Apparently, the Marcoses, Rebecco Panlilio (trustee of the
Marcoses), and some other corporations were claiming assets if not ownership over PALI.
PALI then wrote a letter to the SEC asking the latter to review PSEs decision. The SEC reversed
PSEs decisions and ordered the latter to cause the listing of PALI shares in the Exchange.
ISSUE: Whether or not it is within the power of the SEC to reverse actions done by the PSE.
HELD: Yes. The SEC has both jurisdiction and authority to look into the decision of PSE
pursuant to the Revised Securities Act and for the purpose of ensuring fair administration of the
exchange. PSE, as a corporation itself and as a stock exchange is subject to SECs jurisdiction,
regulation, and control. In order to insure fair dealing of securities and a fair administration of
exchanges in the PSE, the SEC has the authority to look into the rulings issued by the PSE. The
SEC is the entity with the primary say as to whether or not securities, including shares of stock
of a corporation, may be traded or not in the stock exchange.
HOWEVER, in the case at bar, the Supreme Court emphasized that the SEC may only reverse
decisions issued by the PSE if such are tainted with bad faith. In this case, there was no showing
that PSE acted with bad faith when it denied the application of PALI. Based on the multiple
adverse claims against the assets of PALI, PSE deemed that granting PALIs application will
only be contrary to the best interest of the general public. It was reasonable for the PSE to
exercise its judgment in the manner it deems appropriate for its business identity, as long as no
rights are trampled upon, and public welfare is safeguarded.

PNB, NASUDECO vs. Andrada Electric and Engineering Company (2002)

Doctrine:
Basic is the rule that a corporation has a legal personality distinct andseparate from the persons and entities
owning it. The corporate veil may be lifted only if it has been used to shield fraud, defend crime, justify a
wrong, defeat publicconvenience, insulate bad faith or perpetuate injustice. Thus, the mere fact that
thePhilippine National Bank (PNB) acquired ownership or management of some assets of the Pampanga
Sugar Mill (PASUMIL), which had earlier been foreclosed and purchasedat the resulting public auction by the
Development Bank of the Philippines (DBP), willnot make PNB liable for the PASUMILs contractual debts
to respondent.
Facts:
1.PASUMIL (Pampanga Sugar Mills) engaged the services of Andrada Electric for electrical
rewinding, repair, the construction of a power house building,installation of turbines, transformers, among
others. Most of the services werepartially paid by PASUMIL, leaving several unpaid accounts.
2.
On August 1975, PNB, a semi-government corporation, acquired the assets of PASUMILassets that were
earlier foreclosed by the DBP.
3.
On September 1975, PNB organized NASUDECO (National Sugar DevelopmentCorporation), under LOI
No. 311 to take ownership and possession of the assetsand ultimately, to nationalize and consolidate its interest
in other PNB controlledsugar mills. NASUDECO is a semi-government corporation and the sugar arm of the
PNB.4.Andrada Electric alleges that PNB and NASUDECO should be liable for PASUMILs
unpaid obligation amounting to 500K php, damages, and attorneysfees, having owned and possessed the
assets of PASUMIL.
Issue:
Whether PNB and NASUDECO may be held liable for PASUMILs liability to AndradaElectric and
Engineering Company.
Held:NO.
Basic is the rule that a corporation has a legal personality distinct and separate from thepersons and entities
owning it. The corporate veil may be lifted only if it has been usedto shield fraud, defend crime, justify a
wrong, defeat public convenience, insulate badfaith or perpetuate injustice.Thus, the mere fact that the
Philippine National Bank (PNB) acquired ownership or management of some assets of the Pampanga Sugar
Mill (PASUMIL), which had earlier been foreclosed and purchased at the resulting public auction by the
Development Bankof the Philippines (DBP), will not make PNB liable for the PASUMIL's
contractualdebts to Andrada Electric & Engineering Company (AEEC).
74 Phil 560 Civil Law Torts and Damages Distinction of Liability of Employers Under
Article 2180 and Their Liability for Breach of Contract
In January 1932, Francisco De Borja entered into a contract of sale with the NVSD (NatividadVasquez Sabani Development Co., Inc.). The subject of the sale was 4,000 cavans of rice valued
at Php2.10 per cavan. On behalf of the company, the contract was executed by Antonio Vasquez
as the companys acting president. NVSD. only delivered 2,488 cavans and failed and refused

despite demand to deliver the rest hence De Borja incurred damages (apparently, NVSD was
insolvent). He then sue Vasquez for payment of damages.
ISSUE: Whether or not Vasquez is liable for damages.
HELD: No. Vasquez is not party to the contract as it was NVSD which De Borja contracted
with. It is well known that a corporation is an artificial being invested by law with a personality
of its own, separate and distinct from that of its stockholders and from that of its officers who
manage and run its affairs. The mere fact that its personality is owing to a legal fiction and that it
necessarily has to act thru its agents, does not make the latter personally liable on a contract duly
entered into, or for an act lawfully performed, by them for an in its behalf.
The fact that the corporation, acting thru Vazquez as its manager, was guilty of negligence in the
fulfillment of the contract did not make Vazquez principally or even subsidiarily liable for such
negligence. Since it was the corporations contract, its non fulfillment, whether due to negligence
or fault or to any other cause, made the corporation and not its agent liable.
JUSTICE PARAS Dissenting :
Vasquez as president of NVSD is liable for damages. Vasquez, as acting president and manager
of NVSD, and with full knowledge of the then insolvent status of his company, agreed to sell to
De Borja 4,000 cavans of palay. Further, NVSD was soon thereafter dissolved.